Budget: Penny pinch — Canada to phase out the copper coin

This budget is going to cost Canadians a pretty penny. Search the couch cushions, roll all those lucky pennies and take them to the bank, because the government has announced it will phase out the copper coins beginning this fall. The decision, announced in Thursday's federal budget, came down to dollars and cents.

Photograph by: Maria Rantanen
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Search the couch cushions, roll all those lucky pennies and take them to the bank, because the government has announced it will phase out the copper coins beginning this fall.

The decision, announced in Thursday's federal budget, came down to dollars and cents.

Due to inflation, "the penny's burden to the economy has grown relative to its value as a means of payment," according to budget documents.

"The penny is a currency without any currency," said Finance Minister Jim Flaherty. "Free your pennies from their prisons at home and donate them to charity."

@CDN_PENNY, a Twitter account created soon after the budget came down, wrote, in the voice of the scorned Canadian penny, "'Currency without any currency?' Hey Flaherty. Say it to my face, you clown!"

But, outside the twitterverse, Garth Whyte, president and CEO of the Canadian Restaurant and Foodservices Association said the change will have real implications.

While getting rid of the penny may seem like a simple solution, he said "there will be major transitional challenges for restaurateurs, such as reprogramming cash registers, pricing and employee training issues" for the restaurant industry.

"We will have to work very closely and very quickly with the government and our members to meet the fall deadline," he said.

In line with a 2010 Senate report, the government will stop making pennies this fall and ask Canadian businesses and consumers to simply round up (or down) to the nearest five cents at the cash register.

However, if you're using plastic, you'll still pay down to the nearest cent.

The government expects the initiative will save tax dollars, because Canadians currently lose money on every new penny produced by the Royal Canadian Mint — to the tune of $11 million per year.

NDP MP Pat Martin, who said he has tabled four private members bills since 2005 aimed at getting rid of the "nuisance coin," said it costs 1.5 cents to manufacture each penny.

"Making cents hasn't made sense for a long time," said the parliamentarian, who said his next crusade will be against the nickel.

Canada isn't the first country to pinch its pennies. Australia removed its one- and two-cent coins from circulation in 1992, the United Kingdom pitched the half-penny in 1984, and after getting rid of its one-agora coin in 1991, Israel followed suit in 2008 with the five-agorot coin.

The government said it will partner with charity organizations that want to capitalize on a countrywide emptying of piggybacks. According to a 2006 Desjardins Group study, "Canadians could be hoarding several billion pennies, along with other coins."

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This budget is going to cost Canadians a pretty penny. Search the couch cushions, roll all those lucky pennies and take them to the bank, because the government has announced it will phase out the copper coins beginning this fall. The decision, announced in Thursday's federal budget, came down to dollars and cents.

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